Omnibus Law, Challenging Solution for Inviting Investment

Omnibus Law, Challenging Solution for Inviting Investment

Indonesia’s President, Joko Widodo addressed concerns over overwhelmingly burdening regulations and bylaws faced by investors in trying to expand their business developments in Indonesia.

In his speech during the presidential inauguration on October 20th 2019, the President called on lawmakers to simplify the current regime of 74 laws, cutting the number of laws to only 2; Job Creation and Micro-Small-Medium-Enterprises Empowerment. “Too high number of instruments has led to too little productivity and minimal invigoration of investment, while the country still needs much investment to develop,” he said.

The effort to boil down all those regulations to only 2 would not only require the close coordination with, and extensive sessions by, the lawmakers, but there would also need to be revisions on other related instruments; Law No. 12 year 2011 on Laws Formulation Law. Therefore this would be a process that will not only be timely, but also extremely complicated as it deals multiple laws covering different concerns interacting with each other.

Simplifying the regulatory regime for inviting more investment should ideally be prepared carefully in order to ascertain legal certainty. In addition, such a process should be aligned with supervision of local authorities to monitor the harmonization of bylaws and to avoid potential conflicts.

Without such a comprehensive approach, the effectiveness of omnibus law is unlikely to be guaranteed.

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